LA Considers Minimum Wage Increase: $15.25 by 2019

Maurice Thrower
The Associated Press

The Los Angeles City Council and Mayor Eric Garcetti will meet with representatives of the California Restaurant Association and other city officials Tuesday to consider steadily raising the minimum wage over the next four years.

The City Council’s Economic Development Committee will discuss the merits of raising the minimum wage to $13.25 an hour by 2017, and $15.25 an hour by 2019, according to NBC Los Angeles. The current statewide minimum wage is $9 per hour.

The committee had been waiting for a trio of economic impact reports to be completed. One of the city-commissioned reports, conducted by UC Berkeley, found that increased costs to businesses brought on by an increase in the minimum wage would result in a $1.1 billion decrease in demand, with costs being passed onto consumers. The report also found that worker income would increase by $2.4 billion and would likely have a positive impact on spending in the economy.

The report also found that with 600,000 workers likely to be affected by the raise, Los Angeles’ gross domestic product would drop 0.1 percent, resulting in the loss of 3,472 jobs by 2019. But the report was mostly supportive of the Mayor’s original $13.25 proposal.

UC Berkeley’s report stands in stark contrast to a report prepared by the Los Angeles Area Chamber of Commerce. According to the Los Angeles Times, that report found that business would pack up and leave the city if a wage increase were to take effect, resulting in a loss of between 73,000 and 140,000 jobs over the next five years. The report also predicted that poor households would not be helped by the raise because many of the city’s low-wage earners live outside of Los Angeles.

Christopher Thornberg, founding partner at Beacon Economics, which helped to prepare the Chamber of Commerce report, told the Times that however negative a raise to $13.25 an hour would be, “raising it to $15.25 is a kind of nightmare.”

Meanwhile, a third report conducted by the Los Angeles County Federation of Labor and the nonprofit Economic Roundtable came to a completely different conclusion: It found that raising the minimum wage to $15.25 an hour would actually result in the creation of 46,000 new jobs in Los Angeles County, with 25,000 of those being created in the city itself. The Roundtable report predicted $5.9 billion in added wages by 2019, creating a “stimulus effect for the region.”

In addition to Tuesday’s meeting, the Economic Development Committee will reportedly meet three more times between the end of March and early April to discuss the conflicting reports.

“I think the only study is the one that a bunch of council members are going to do when they really sit down and listen and look at all the issues,” restaurateur Bill Chait told NBC. “I think that Los Angeles has a unique sorta condition and politically in terms with how the council interacts with the mayor and I think it hopefully will foster really good dialogue to come up with the best situation.”